-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VVhbYRiZ1XaXMd0Qr7KLlelspiv94hBj3q9Tjtv3U1vU9sQc/vII53EdIY0Nfr1k uq1IoMVKBvWQEj/oVLoX+Q== 0000040934-96-000011.txt : 19961211 0000040934-96-000011.hdr.sgml : 19961211 ACCESSION NUMBER: 0000040934-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961026 FILED AS OF DATE: 19961210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESEE CORP CENTRAL INDEX KEY: 0000040934 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 160445920 STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01653 FILM NUMBER: 96678128 BUSINESS ADDRESS: STREET 1: 445 ST PAUL ST CITY: ROCHESTER STATE: NY ZIP: 14605 BUSINESS PHONE: 7165461030 MAIL ADDRESS: STREET 1: 445 ST PAUL STREET CITY: ROCHESTER STATE: NY ZIP: 14605 FORMER COMPANY: FORMER CONFORMED NAME: GENESEE BREWING CO INC DATE OF NAME CHANGE: 19880322 10-Q 1 FORM 10-Q FOR PERIOD ENDING 10/26/96 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended OCTOBER 26, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission File Number 0 - 1653_ GENESEE CORPORATION (Exact name of registrant as specified in its charter) STATE OF NEW YORK 16-0445920 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 445 St. Paul Street, Rochester, New York 14605 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (716) 546-1030 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of the date of this report, the Registrant had the following shares of common stock outstanding: Number of Shares Class Outstanding Class A Common Stock (voting), 209,885 par value $.50 per share Class B Common Stock (non-voting), 1,407,342 par value $.50 per share 1 GENESEE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS October 26, 1996 and April 30, 1996 UNAUDITED AUDITED (Dollars in Thousands) October 26, 1996 April 30, 1996 ASSETS Current assets: Cash and cash equivalents $ 2,066 2,560 Marketable securities available for sale 34,923 34,896 Trade accounts receivable, less allowance for doubtful receivables of $397 at October 26, 1996; $433 at April 30, 1996 11,929 13,168 Inventories, at lower of cost (first-in, first-out) or market 12,625 11,959 Deferred income tax assets 899 898 Other current assets 1,288 1,376 Total current assets 63,730 64,857 Net property, plant and equipment 30,424 30,306 Investment in and notes receivable from unconsolidated real estate partnerships 8,413 8,466 Investments in direct financing and leveraged leases 28,883 28,092 Other assets 2,625 2,314 Total assets 134,075 134,035 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 9,439 10,210 Income taxes payable 707 455 Federal and state beer taxes payable 1,398 2,246 Accrued expenses and other 6,335 5,827 Total current liabilities 17,879 18,738 Deferred income tax liabilities 7,814 7,482 Accrued postretirement benefits 15,593 15,526 Other liabilities 405 428 Total liabilities 41,691 42,174 Minority interests in consolidated subsidiaries 1,689 1,527 Shareholders' equity: Common stock Class A 105 105 Common stock Class B 753 753 Additional paid-in capital 5,849 5,839 Retained earnings 87,015 87,285 Unrealized gain / (loss) on marketable securities, net of income taxes 478 (113) Less treasury stock, at cost 3,505 3,535 Total shareholders' equity 90,695 90,334 Total liabilities and shareholders' equity $ 134,075 134,035 See accompanying notes to consolidated financial statements.
2 GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS Thirteen Weeks Ended October 26, 1996 and October 28, 1995 (Dollars in Thousands, Except Per Share Data) UNAUDITED 1996 1995 Revenues $47,296 45,251 Federal and state beer taxes 10,241 9,925 Net revenues 37,055 35,326 Cost of sales 28,630 27,778 Gross profit 8,425 7,548 Selling, general and administrative expenses 8,818 8,521 Operating income / (loss) (393) (973) Investment income 528 780 Other income / (expense), net 83 82 Interest of minority partners in earnings of consolidated subsidiaries (161) (193) Earnings / (loss) before income taxes 57 (304) Income taxes 21 (122) Net earnings / (loss) - $.02 per share in 1996 and ($.11) in 1995 36 (182) Retained earnings at beginning of period 88,112 87,209 Less: dividends - $.70 per share in 1996 and $.70 per share in 1995 1,133 1,132 Retained earnings at end of period $87,015 85,895 See accompanying notes to consolidated financial statements.
3 GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS Twenty Six Weeks Ended October 26, 1996 and October 28, 1995 (Dollars in Thousands, Except Per Share Data) UNAUDITED 1996 1995 Revenues $98,864 95,523 Federal and state beer taxes 21,466 21,834 Net revenues 77,398 73,689 Cost of sales 58,325 56,974 Gross profit 19,073 16,715 Selling, general and administrative expenses 17,767 16,879 Operating income / (loss) 1,306 (164) Investment income 1,132 1,602 Other income / (expense), net 143 75 Interest of minority partners in earnings of consolidated subsidiaries (349) (315) Earnings before income taxes 2,232 1,198 Income taxes 804 479 Net earnings - $.88 per share in 1996 and $.45 in 1995 1,428 719 Retained earnings at beginning of period 87,285 86,869 Less: Dividends - $1.05 per share in 1996 and $1.05 per share in 1995 1,698 1,693 Retained earnings at end of period $87,015 85,895 See accompanying notes to consolidated financial statements.
4 GENESEE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Twenty Six Weeks Ended October 26, 1996 and October 28, 1995 UNAUDITED (Dollars in thousands) 1996 1995 Cash flows from operating activities: Net earnings $ 1,428 719 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,431 2,430 Loss on disposition of assets 64 0 Deferred tax provision (1) 113 Other 315 326 Changes in non-cash assets and liabilities: Trade accounts receivable 1,275 594 Inventories (666) 514 Other assets (223) (1,746) Accounts payable (771) (458) Accrued expenses and other 507 (656) Income taxes payable 252 26 Federal and state beer taxes (848) (477) Accrued postretirement benefits 67 0 Other liabilities (23) 135 Net cash provided by operating activities 3,807 1,520 Cash flows from investing activities: Capital expenditures (2,549) (3,640) Sales of marketable securities 5,861 3,058 Purchases of marketable securities (5,029) (5,463) Investments in and advances to unconsolidated real real estate investments, net of distributions 53 (4,223) Net investment in direct financing and leveraged leases (792) 396 Withdrawals by minority interest (187) (351) Repayment of real estate mortgage receivable 0 5,807 Net cash used in investing activities (2,643) (4,416) Cash flows from financing activities: Principal payments on long term debt 0 (4,038) Payment of dividends (1,698) (1,693) Net proceeds from treasury stock transactions 40 430 Net cash used in financing activities (1,658) (5,301) Net increase / (decrease) in cash and cash equivalents (494) (8,197) Cash and cash equivalents at beginning of the year 2,560 10,422 Cash and cash equivalents at end of the period $ 2,066 2,225 See accompanying notes to consolidated financial statements.
5 GENESEE CORPORATION Notes to Consolidated Financial Statements NOTE (A) The Corporation's consolidated financial statements enclosed herein are unaudited with the exception of the Consolidated Balance Sheet at April 30, 1996 and, because of the seasonal nature of the business and the varying schedule of its special sales efforts, these results are not necessarily indicative of the results to be expected for the entire year. In the opinion of management, the interim financial statements reflect all adjustments, consisting of only normal recurring items, which are necessary for a fair presentation of the results for the periods presented. The accompanying financial statements have been prepared in accordance with GAAP and SEC guidelines applicable to interim financial information. These statements should be reviewed in conjunction with the annual report to shareholders for the year ended April 30, 1996. NOTE (B) The weighted average number of Class A and Class B shares outstanding used in the computation of net earnings per share is 1,617,227 for the thirteen week period ended October 26, 1996 and 1,608,726 for the thirteen week period ended October 28, 1995. The weighted average number of Class A and Class B shares outstanding used in the computation of net earnings per share is 1,616,971 for the twenty six weeks ended October 26, 1996 and 1,605,576 for the twenty six weeks ended October 28, 1995. NOTE (C) Inventories are summarized as follows: Dollars in thousands October 26, 1996 April 30, 1996 Finished goods $ 4,043 $ 3,219 Goods in process 1,936 1,891 Raw materials, containers and packaging supplies 6,646 6,849 Total inventories $ 12,625 $ 11,959
6 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparison of 13 weeks ended October 26, 1996 to 13 weeks ended October 28, 1995 Consolidated net revenues for the thirteen weeks ended October 26, 1996 were $37.1 million, an increase of $1.8 million over consolidated net revenues reported for the same period last year. The higher revenues were primarily due to increased sales by Genesee Brewing Company. On a consolidated basis, the Corporation reported net earnings of $36,000, or $.02 per share in the second quarter this year, compared to a net loss of $182,000, or $.11 per share, for the same period last year. The higher profit relative to last year was primarily attributable to improved performance by Genesee Brewing Company. Genesee Brewing Company Genesee Brewing Company's net sales in the second quarter were $30.6 million, an increase of $1.9 million from last year's second quarter net sales of $28.7 million. Barrel sales (which include volume under the contract to brew and package product for Boston Beer Company) were up 36,000 barrels, or 7.7%. The increases in net sales and barrel sales were partially attributable to higher volume under the contract with Boston Beer Company. Volume under this contract was up 78,000 barrels compared to the second quarter last year when production had just commenced. In addition, sales of Genesee Brewing Company's HighFalls craft brands continued to grow, with second quarter barrels sales up 21,000 barrels, or 27%, relative to the same period a year ago. Sales of Genesee Brewing Company's established core brands, however, continued to decline. Sales revenues in the second quarter this year benefited from a general industry price increase that went into effect late in fiscal 1996. This price increase also had a favorable affect on Genesee Brewing Company's gross profit which increased to $7.1 million, or 23.2% of net sales, in the second quarter of fiscal 1997, compared to $6.0 million, or 20.9% of net sales, in the second quarter of fiscal 1996. The increase in gross profit is also attributable to lower aluminum can costs. Genesee Brewing Company's selling, general and administrative expenses were up $296,000 in the second quarter of fiscal 1997 compared to the same period last year. The increase was primarily due to the timing of planned increases in sales and marketing expenditures, primarily to support the company's HighFalls brands, including expansion into new markets. Genesee Brewing Company showed an operating loss of $1.1 million for the second quarter this year versus a $1.8 million operating loss for the second quarter last year. Increased contract brewing and HighFalls volume, higher selling prices and lower aluminum can costs all contributed to Genesee Brewing Company's improved profit performance in the second quarter of fiscal 1997. 7 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Ontario Foods Second quarter net sales for Ontario Foods were $5.9 million, compared to $6.1 million for the second quarter last year. The sales decrease is attributable to lower contract sales resulting from the loss of a major contract customer that moved production to its own production facility late in fiscal 1996. Despite lower overall sales, private label sales increased by $260,000 compared to the second quarter last year, due primarily to the continued growth in the company's line of noodles and rice side dish products. The lower contract sales had an adverse effect on profitability, which was only partially offset by private label sales. Ontario Foods reported a second quarter operating profit of $281,000, compared to $489,000 of operating income reported in the second quarter last year. In addition to the lower contract sales, Ontario Food's margins were adversely affected by higher sugar prices and freight costs. Genesee Ventures Genesee Ventures, Inc., the Corporation's equipment leasing and real estate investment subsidiary, reported operating income of $558,000 for the second quarter of fiscal 1997, compared to $553,000 for the second quarter of fiscal 1996. Lease revenues continued to be strong, showing the effect of the large volume of leases closed last year. Genesee Ventures' real estate investments maintained high occupancy rates and performance was generally on plan for the second quarter. Comparison of 26 weeks ended October 26, 1996 to 26 weeks ended October 28, 1995 Consolidated net revenues for the twenty-six weeks ended October 26, 1996 were $77.4 million, an increase of $3.7 million from the consolidated net revenues of $73.7 million reported for the same period last year. The higher revenues were the result of higher malt beverage sales, side dish sales and lease revenues. On a consolidated basis, the Corporation reported net earnings of $1.4 million, or $.88 per share, for the first half this year, compared to net earnings of $719,000, or $.45 per share, for the same period last year. The $709,000, or $.43 per share, increase in net earnings was primarily attributable to Genesee Brewing Company's improvement in operating performance. 8 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Genesee Brewing Company Genesee Brewing Company's net sales in the first half of fiscal 1997 were $65.4 million, an increase of $2.6 million, or 4.1%, from the prior year's net sales of $62.8 million. Barrel sales (which include volume under the contract to brew and package product for Boston Beer Company) were up 27,000 barrels, or 2.7%, in the first half of fiscal 1997. The increases in net sales and barrel sales for the Genesee Brewing Company were the result of sales under the Boston Beer Company contract, which totaled 129,000 barrels in the first half of this year compared to 4,000 barrels in the same period last year, an increase of 69,000 barrels, or 46%, in HighFalls craft brand sales, and increased unit prices as a result of the general industry price increase. Genesee Brewing Company's gross profit was $16.8 million, or 25.6% of net sales, in the first half of fiscal 1997, compared to $14.5 million, or 23.1% of net sales, in the first half of fiscal 1996. The 2.5% increase in gross profit as a percent of net sales was primarily the result of the industry price increase as well as a reduction in the cost of aluminum cans. Genesee Brewing Company's selling, general and administrative expense increased $888,000 in the first half of fiscal 1997 compared to the same period last year. The increase was primarily due to the timing of planned increases in selling and marketing expenditures to support the growth of the company's HighFalls brands, including expansion into new markets. Operating profit was $282,000 for the first half of this year compared to an operating loss of $1.1 million reported in the first half of last year. Increased contract brewing and HighFalls volume, higher selling prices and lower aluminum can costs all contributed to Genesee Brewing Company's improved profit performance in the first half of fiscal 1997. Ontario Foods Net sales for Ontario Foods were $10.7 million in the first half of fiscal 1997, compared to $9.9 million for the first half last year. The increase in net sales of $800,000, or 8.0%, for the first half was attributable to continued growth in side dish sales. Ontario Foods reported operating income of $136,000 for the first half of fiscal 1997, compared to operating income of $316,000 for the same period last year. The decrease in operating income was due primarily to lower contract manufacturing revenues and to an increase in sugar costs. 9 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Genesee Ventures Genesee Ventures, Inc., the Corporation's equipment leasing and real estate investment subsidiary, reported operating income of $1.2 million for the first half of fiscal 1997, compared to $947,000 for the first half of fiscal 1996. The increase in operating income was primarily attributable to higher lease revenues from Cheyenne Leasing. Cheyenne Leasing's strong revenues are due in turn to the high volume of leases closed in fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents, and marketable securities totaled $37.0 million at October 26, 1996, compared to $37.5 million at April 30, 1996. Trade receivables at October 26, 1996 were approximately $1.2 million lower than the balances reported at April 30, 1996. The peak selling season for Genesee Brewing Company is typically April through August. Genesee Brewing Company's receivables are traditionally higher at fiscal year end and throughout the summer months. Inventories at October 26, 1996 were $666,000 higher than the balances reported at April 30, 1996. The higher inventory balances were due primarily to increased inventories for Boston Beer Company. In addition, Ontario Foods typically purchases sugar during the fall and winter months to take advantage of lower material prices for spring and summer production of iced tea and drink mixes. Ontario Foods' sugar inventories therefore typically begin to increase in the fall. During fiscal 1997, Genesee Brewing Company initiated work on a multi-million dollar capital project to install a new keg filling system. This new system will enhance Genesee's packaging capabilities and allow it to package draft beer for both types of draft dispensing systems currently used by the retail trade. The system is expected to be in service prior to the end of the third quarter and is expected to cost in excess of $5 million, which will be funded internally. At the end of the second quarter of fiscal 1997, $1.1 million had been spent on this project. The Corporation expects to fund future capital needs internally as it has in the past. With respect to real estate and equipment leasing, such investments may also include a debt component, generally obtained on a non-recourse basis. Current liabilities at October 26, 1996 were down $859,000 from fiscal year end. This decrease was primarily attributable to timing of federal and state beer tax payments. 10 GENESEE CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) During the second quarter this year, the mortgage on the Clinton Square office building (in which the Corporation has both a partner's and creditor's interest) was extended for one year with the existing lender. As part of that extension, the Corporation agreed to extend its $2.5 million limited guarantee of the mortgage loan for one year. The building is currently 97% occupied, operating on plan and in compliance with all covenants and obligations contained in the mortgage loan agreement. The building has an appraised value in excess of the debt against the building. In addition, the other partners have provided Genesee Corporation with additional collateral to secure the Corporation's obligation under its guaranty to the bank. To enhance the Corporation's opportunities for future growth and to capitalize on its strong financial condition, the Corporation's long term strategy includes plans to seek investment opportunities outside its core brewing business. The Corporation will continue to search for and develop such opportunities. PART II. OTHER INFORMATION Item 1. Legal Proceedings In September 1992, Myrtha Hernandez, doing business as Upstate Returns, commenced a lawsuit in U.S. District Court for the Western District of New York against Genesee Brewing Company and beer distributors and soft drink bottlers in Rochester, New York. The lawsuit alleged that Genesee Brewing Company conspired with the other defendants in violation of federal and state antitrust statutes to prohibit and restrain the plaintiff from entering the beverage container recycling business. The complaint sought compensatory damages of $1,000,000, trebling thereof under applicable antitrust statutes, punitive damages of $15,000,000, attorneys fees, costs and disbursements. The District Court granted summary judgment in favor of Genesee Brewing Company and the other defendants in May 1995. The Second Circuit Court of Appeals rejected the plaintiff's appeal of the District Court decision granting summary judgment. In April 1996, the plaintiff filed a motion with the District Court to reopen the case. The District Court denied this motion and the plaintiff has appealed the denial to the Second Circuit Court of Appeals. 11 GENESEE CORPORATION Item 4. Submission of Matters to Vote of Security Holders The Corporation's annual meeting of Class A shareholders was held on October 24, 1996. At the annual meeting, shareholders elected Stephen B. Ashley, Thomas E. Clement and John L. Wehle, Jr. to serve as directors until the annual meeting of shareholders in 1999. The terms of office of William A. Buckingham, Gary C. Geminn, William J. Hoot, Samuel T. Hubbard, Jr., Robert N. Latella, Richard P. Miller, Jr., John D. Reifenrath and Charles S. Wehle continued after the annual meeting of shareholders. Item 6. Exhibits and Reports on Form 8-K (a) No exhibits are being filed with this report. (b) The Corporation did not file any report on Form 8-K during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENESEE CORPORATION Date: 12/10/96 / s / Robert N. Latella Robert N. Latella Executive Vice President and Chief Operating Officer Date: 12/10/96 / s / Edward J. Rompala Edward J. Rompala Vice President and Treasurer 12 EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1,000 6-MOS APR-30-1996 OCT-26-1996 2,066 34,923 12,326 397 12,625 63,730 106,265 75,841 134,075 17,879 0 858 0 0 89,837 134,075 98,864 98,864 58,325 21,466 17,767 0 0 2,232 804 1,428 0 0 0 1,428 0.88 0 -----END PRIVACY-ENHANCED MESSAGE-----